What financial tool can elderly homeowners use to access equity without monthly payments?

Elderly homeowners can use a reverse mortgage to access equity in their homes without the requirement of monthly payments. This financial tool allows homeowners, typically aged 62 and older, to convert part of the equity in their home into cash. Unlike traditional mortgages where the homeowner makes regular mortgage payments, in a reverse mortgage, the lender pays the homeowner, thus providing them with income while they continue to live in their home.

The amount that can be borrowed depends on various factors, including the homeowner’s age, the home’s value, and current interest rates. This arrangement means that repayment of the loan, which includes both the amount borrowed and interest, is deferred until the homeowner either moves, sells the home, or passes away. This is particularly appealing for elderly homeowners who may have fixed incomes and need additional financial support without the burden of monthly payments.

In contrast, the other financial tools mentioned do not serve the same purpose or have different payment structures. For instance, a wraparound mortgage involves a new mortgage wrapping around an existing mortgage and typically requires monthly payments. A purchase option refers to an agreement that gives a buyer the right but not the obligation to purchase a property, and a blanket mortgage is used to finance multiple properties, generally requiring regular payments as well